How much of the mortgage is acquisition indebtedness

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Mylo, Inc., an exempt organization, owns a building. Mylo's adjusted basis for the building is $650,000. Of the building's total area of 8,000 square feet, the front portion (approximately 2,000 square feet) is used in carrying out Mylo's exempt purpose. The remainder of the building is leased to a taxable entity, for $280,000 each year.

The unamortized balance of a mortgage relating to the original acquisition of the building by Mylo is $400,000.

a. What portion of the building's adjusted basis is treated as debt-financed property?

b. How much of the mortgage is acquisition indebtedness?

Reference no: EM13944233

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